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Back To The Future Part II: Ben’s Barometer November 2016

Back to the future Part II

Whenever I am asked “what do you think the market is going to do?” it makes me think of Marty McFly when he attempted to bring a sports almanac home to the past so he could profit at the bookies. His was an excellent plan, but unlike Marty McFly we don’t have a time machine, so instead, we try to understand factors which have the potential to affect the market. Here are some of the factors which I believe could have an effect, both positive and negative, on our market.

USA

Banks play an important part in the liquidity of the residential property market. There has been some talk recently that the US Federal reserve will lift interest rates soon. If this was to happen, borrowing costs for our banks will rise and so will our interest rates. When the cost of borrowing is high, debt servicing costs increase and this has a negative effect on demand and capital gains.

Immigration v migration

It appears that New Zealand is the “it” place to be, as immigration continues to outstrip our migration. Even with recent changes introduced by the government we are producing a massive net surplus with all of these people needing a place to live. This puts pressure on demand for houses to rent and own. How does this impact the market? More buyers create greater demand which has a positive effect on capital gains and puts upward pressure on rents.

Government change

2017 will see another election cycle in New Zealand, and with property a hot political issue we are likely to see major policy announcements by all parties. As discussed in our September Barometer, when Vancouver introduced a ‘foreign buyers tax’ it crashed the market overnight. Could a new government introduce something similar? Something else to watch out for is the noticeable market pause we experience in Wellington while the campaign is in full swing. A change in government is likely to have a negative effect on demand and capital gains as uncertainty creeps in with the potential for an incoming party to stamp their mark on the housing crisis.

The Wellington Market

September was a little slower than the previous few months but the end of school holidays has seen a bit of energy return to the market. LVR changes have definitely had an effect on fringe investors with many traditional rental properties struggling for interest as people have trouble securing finance. Buyers looking to secure first homes, family homes or downsize are still active and out in force.

With plenty of listings on our horizon we are predicting a busy run into Christmas (yes that’s right, we said the C word!)

Wellington Market Quick Facts

Average sale price by area:

REINZ also released this updated median price graph this month:

Click here if you would like to find out how much your value has increased.

November Fun Facts

Around the time you receive this email you may have already started to hear the familiar pop popping of fireworks around your neighbourhood. November 5th marks the infamous “Guy Fawkes Day.” But why do we celebrate this day with such a bang?

Did you know?

Guy Fawkes is the celebration of the failed “Gunpowder Plot” of 1605, the failed assassination attempt against King James I of England and VI of Scotland by a group of provincial English Catholics (one named Guy Fawkes).

Fawkes was tortured for four days before admitting to his part in the Gunpowder Plot and giving the names of his co-conspirators. The National Archives in the UK hold his two signed confessions.

The slang term of calling another person “guy” comes from the name Guy Fawkes. The original meaning was “an ugly, repulsive person.” Over time it just referred to a man.

A Chinese cook accidentally discovered fireworks during the 10th century. He mixed three kitchen ingredients and set the concoction alight. The result was colourful flames.

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